‘If They Don’t Have To Sell, They Shouldn’t Be Selling’
Some housing bubble updates from California. “Oroville realtors say house sales dropped during the first quarter of the year. Gordon Andoe, broker and appraiser, gathered statistics from a data base for the area including Thermalito, Las Plumas, Oroville, Kelly Ridge, Palermo and the east foothills. In 2005, 210 single-family homes sold in the price range of $200,000 and $375,000.”
“In comparison, from January 1 to March 31, 2006, 31 homes sold in the same area and price range. That would be the equivalent of 124 homes if sales remained the same throughout the year, which reflects a considerable slowing in home sales.”
“Last year, out-of-town investors were buying up rental property in the Oroville area, which drove up the cost of housing, he said. Talking to other realtors, Andoe said he has surmised the housing market is the same in Chico, Gridley, Paradise and surrounding areas.”
“(Broker) Cindy Peebles speculated the cause for slow down could be over-priced houses. She expects some houses that have been listed at too high will drop in price.”
The Desert Sun. “Coachella Valley home prices, sales counts and appreciation rates continued their recent flattening-out patterns in March. The median selling price of $400,000 remained historically high for the region, but was down from the all-time high of $418,500 set the previous month.”
“‘The market is turning in favor of buyers,’ said Greg Berkemer, VP of the California Desert Association of Realtors. ‘It just means it’s getting more important for sellers to set their prices right.’”
“For now, however, there are few signs that buyers are biting at current prices. According to the desert Realtors’ group, there are currently 7,467 unsold properties on the valley market, more than twice the number seen a year ago and more than five times the level of April 2004.”
“The situation is frustrating for homes sellers like Joe and Linda White. They’ve been trying to sell their 2-year-old La Quinta home for the last six months, and have had to drop the asking price three times, and are probably looking at another 25 to 30 percent price cut in the coming weeks.”
“Berkemer and White both noted that the current inventory glut can be attributed in part to non-resident investors, some of them quick-sell ‘flippers,’ now looking to sell off properties they purchased in the past year. And like the Whites, many sellers are competing against newly built homes coming on the market in their own subdivisions.”
The Tracy Press. “Tracy’s slowing real estate market is far better for buyers than for sellers. First quarter home sales slowed from 442 in 2005 to 319 in 2006, and local real estate agents report a seven-month backlog of homes for sale.”
“‘For every two homes coming on to the market, only one is going off,’ (agent) Donna Baker said. In the 10 days before Monday, 72 homes came on the market in inner-city Tracy, while 41 were sold. ‘If they don’t have to sell, they shouldn’t be selling.’”
“Educated buyers are forcing sellers to list their homes at realistic prices. ‘A year or two ago, if a neighbor’s identical home sold for $500,000, you could have listed yours for $525,000 or $550,000,’ said real estate agent Karl Enzmann. ‘Now, if you put it on (the market) more than two to three percent higher, you’re going to be living in a ghost town. Nobody’s going to be looking at it.’”
“Educated buyers are forcing sellers to list their homes at realistic prices. ‘A year or two ago, if a neighbor’s identical home sold for $500,000, you could have listed yours for $525,000 or $550,000,’ said real estate agent Karl Enzmann. ‘Now, if you put it on (the market) more than two to three percent higher, you’re going to be living in a ghost town. Nobody’s going to be looking at it.’”
Hey Karl, Here’s a news flash for you. Nobody is going to be looking at these houses until they are considerably below the 500K mark of two years ago. How does that grab you? Better start educating your sellers if they want to move out of the way of the train heading their way. Let the ass-pounding begin!
“The situation is frustrating for homes sellers like Joe and Linda White. They’ve been trying to sell their 2-year-old La Quinta home for the last six months, and have had to drop the asking price three times, and are probably looking at another 25 to 30 percent price cut in the coming weeks.”
What happened to RE agents and their declaration,”Prices never go down on real estate. It’s just like the price on cars, it just keeps going up”.
I guess they have been reading this blog…
RE agents are salespeople…they will do whatever is necessary in order to close deals. The fact that some are now starting to tell sellers to be realistic with price expectationsis proof of this. How could they possibly not do this with rising inventory and interest rates and expect to sell anything? They will play an important role in driving prices down to realistic levels.
Agreed. It’s worth realizing that it’s in THEIR best interest to expedite price slashing. Until this bubble fully deflates, there will be few sales and few commissions for RE agents.
Dare I say that RE agents may become the bubble-poppers’ best friend?
25-30% in a few weeks?!?!
Major haircut?
‘If they don’t have to sell, they shouldn’t be selling.’
Denial… Check
Anger… Check
Bargaining… Check
Depression…
Acceptance…
That sums it right there. Excellent post.
That’s why the bubble that doesn’t exist is bursting. It’s the bastards who don’t need to sell are selling! They’re ruining it for everyone! LMAO!
‘If they don’t have to sell, they shouldn’t be selling.’
Remember the good ol’ days when agents said “If you don’t have to buy, you shouldn’t be buying”?
Oh wait…
Excellent point. Excellent!
Yes!
“‘For every two homes coming on to the market, only one is going off,’ (agent) Donna Baker said.If they don’t have to sell, they shouldn’t be selling.”
WTF? So since none of us ever have to buy, we should never buy. Right Donna? Just blame sellers who see a market top and want to cash out before the crash.
Here’s some basic math for you Donna
Doubling inventory + higher interest rates = popping of bubble
OK, maybe only fools are selling now ( the smart ones have already done that last year), but only greater fools would listen to her and keep waiting. Inflation-adjusted prices will never be this good for at least another 20 years.
You’re right….and just wait until the ARM resets begin to really kick in. Many people will be trying to sell houses they can no longer afford - by their choice or the institution holding the mortgage. Ouch.
Inflation-adjusted prices will never be this good for at least another 20 years.
Wow, you may be right!
If I owned a house, I would SELL! SELL! SELL!
No. The fools are buying. Chopping 15% off last years price still gives you an incredibly good profit if you didn’t overpay/overleverage yourself.
In my area, I have seen condo’s drop between 10 and 20%. Single Family are holding last years peaks. DOM in my neigborhood for SFD are under 30 days. Maybe things will change; but I have no crystal ball.
DOM = Total Scam. This is meaningless.
Sorry, realtors re-list and re-list and start the clock over and over again.
I saw a listing in Phoenix that was re-listed for the third time with a $50,000 price decrease from $300k a few weeks ago. I wrote to the agent and explained nobody was fooled by the re-listing of the POS, and now that only non-investors are left, it will rot on the market.
Yep, house near me been on sale since last July. Estimated days on market about 250, MLS says 14 as of earlier this week. Relisted several times with the clock reset.
yeah, never ever look at DOM, see this entry at my blog.
Ya I notice it everyother month relistings, and here In OC they dont even drop the price they just relist it for the same price and this one been on the Market since December, been relisted and not one drop in price check it out?
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=S435071&page=1&property_type=SFR&mls=mls_so_cal&cKey=brj0476b&source=SOCALMLS
I am only commenting on the signs I see with my own eyes. I am not relying on MLS - although here they must list TOTAL DOM. A house that has been relisted may look like this: dom 04/152. i.e. current new listing 4 days old. Added to prior listing = 152 days.
Just another area outside the metro proper that is slowing first with the main cities to be the last to fall. High gas prices don’t help these commuter towns’ RE markets and will continue to help weaken them.
Yeah, I’ve wondered whether high gas prices might limit the price slide in downtown condos.
I think as overpriced a lot of them are, they will see a big slide anyways.
Oh, they’re going down. And in the truly overbuilt areas, they’re going to fall hard and far. But if gas prices hit $4.00 and up, they’re going to start looking a little more reasonable compared to exurban developments >90min drive from downtown. Might end being the difference between a 40% drop and a 60% drop. Of course they largely appeal to different people, singles & young couples versus families with children.
“‘For every two homes coming on to the market, only one is going off,’ (agent) Donna Baker said. In the 10 days before Monday, 72 homes came on the market in inner-city Tracy, while 41 were sold. ‘If they don’t have to sell, they shouldn’t be selling.’”
Hey Donna…here’s a lesson for you in California.
No one admits they’ve lost here.
No one asks questions.
Everyone knows everything.
Therefore, your logic is skewed.
They may ’say’ they don’t have to sell.
It may ‘appear’ that they don’t have to sell.
But apparently, Donna…
…THEY ARE SELLING.
Moron.
I have a friend who doesn’t have to sell but is selling. Last fall she started salivating over the “deals” on the market and felt the urge to cash in on her home so she could buy a cheaper one. She completely fails to realize that her home has lost value, too. She put it on the market last month for the price a comparable home got last Spring. There are several others in the neighborhood who are actually moving out of the area and need to sell, but theirs aren’t selling either, no matter what the price.
I have friends who have also seen prices drop in the Loudoun county VA area. They “low-balled” an offer on a single family probably around 600k, but the seller wouldn’t accept their contingency. So they signed the contract and are trying to sell their townhouse. Their TH isn’t selling and there are hundreds of identical units for lower than their asking price. I hope it works out for them but I think that is unlikely. They are either giong to have the extra costs of a bridge loan and 2 mortgages eating away at them or they will have to backout and lose their earnest money.
If you have to move now for whatever reason sell first and buy later. Or better yet sell first and rent for awhile until this the ARM resetting mess shakes out.
Hey Auction, nice post!
Everything I need to know about California I learn from Leno’s “Jay Walking” segment on the Tonight show. Impressive crew to be sure. Fog a mirror, get a house…
This is a timely post. The landlord of the house I’m currently renting in San Diego just informed me that he is going to try to sell it. An identical house just down the street has just been put up for sale. Both he and his wife are mortgage brokers. I think they have used this house has leverage for the $1.3 million house they recently bought. I don’t know if they’re interest-only period is over, but if I were him I would be pretty worried. It sucks to have to move again, especially with three kids, but it’s better than drowning in an upside down mortgage. Ironically, I have been noticing lots of houses for rent on Craig’s list.
By the way, even though they probably won’t sell for at least a year, I prefer to move because I don’t like real estate agents coming around. Besides that, we could use more room anyway. On the other hand, it might be a good opportunity to watch this thing unfold firsthand.
If you move out and take your rent money with you, you’ll be able to watch it unfold quicker and without risk that the house inexplicably catches fire someday with your clothes in it.
Phoenix MLS
43,024 Total listings
37,255 SFR, MFR, & condos
Someone predicted 50,000 around June 1st on this blog a few weeks ago. I think the prediction is on target.
One thing I gotta say about people leaving California????
I seen more out of state Lincence plates In OC then ever before?
Is it because they over bought somewhere else and lost, came back here where it even cost more and they move back to Mom and Dad’s????
Go to UHaul.com and play around with the rates moving in and out of CA. example, if you are moving from Irvine to San Antonio TX a 26′ truck will be $4300, if you are moving from San Antonio to Irvine same truck is $490. I couldn’t believe that when I saw it but its true. Nobody in their right mind would pick up a family and move to California right now.
They can’t afford to do it at this time.
Tracy. I feel bad for the farmers and ranchers that have tried to tough it out the last 10 years and didn’t sell out to the developers. Once something is built it is almost impossible to revert it back to ag usage. Oh well, everyone wants to live in California so Tracy will certainly have a robust market going forward right? Right? I’m cereal you guys!
” Oh well, everyone wants to live in California so Tracy will certainly have a robust market going forward right? Right? I’m cereal you guys!”
imposter…….
I have nothing against Tracy, but that area will really be hit hard. If you want to commute to the real Silly-con valley from there, it’s easily over 60 miles one way. Can take atleast 90min each direction, a good 3hrs spent in commuting EVERY day.
People who could not buy it in the Bay Area, bought there. In the downturn, when inventory in Santa Clara County and East Bay is increasing rapidly, buyers have far more choice.
It’s possible that core areas like Cupertino may achieve soft landing, but Tracy and Mountain House are going to be hit real bad. 500k is simply outrageous. I would not be surprised even a bit if those prices come down to below 300K before 2008 sping. Very very likely.
Yeah right, they should not sell, if they don’t have to. Today, maybe they don’t have to. They should wait till the ARM resets in 2008, rates are higher and the prices are 50% down. Then they will have to. Thanks for the advice.
Cupertino will fall but not as much as the outer areas. Hard to predict how much prices will fall as it depends on if we have a recession or deep recession. That part is impossible to predict. Overall, it will be tough times for RE in the next 5 years.
Well, the Tracy/Stockton area certainly got hit hard in the early ’90’s downturn. I had friends who were so far underwater that they simply mailed the keys to the mortgage company and left the state.
I’m trying to figure out how Condotino can achieve a soft landing when you can rent a condo for $1700 a month but to buy it you’ve got to spend $650k.
“The situation is frustrating for homes sellers like Joe and Linda White. They’ve been trying to sell their 2-year-old La Quinta home for the last six months, and have had to drop the asking price three times - and are probably looking at another 25 to 30 percent price cut in the coming weeks.”
This is most likely the property.
And here’s the zillow profile, you see how the property tax assessment is only $396,000.
what a fustrating experience to not be able to find someone to buy something at a markup of $300,000 after using it for 2 years.
even more fustrating when the markup is only $240,000 and there’s still no buyers.
what is wrong with these people??!!! How come the reporter never ask these fustrated sellers this simple question: “if you are a buyer, will you buy your house right now for $700,000?”
‘How come the reporter never ask these fustrated sellers this simple question: ‘if you are a buyer, will you buy your house right now for $700,000?’
That’s a really good question to keep in mind when discussing prices.
The remarkable impact of Zillow. Once the knowledge of this site’s wide-ranging data is commonplace, sellers will confront a new kind of buyer: ‘So tell me, Mr. and Mrs. White, just why does this home rate a 1/4 million dollar markup? Improvements, or just greed?’
But I NEED to get$250,000 more, I’ve refinanced and already spent the money.
How do you think I bought my Hummer??
How about if they were a buyer, could they afford their own home ?(assuming they didn’t have the $300K bubble windfall that they are hoping to reap off of the greater fool that they hope to sell to). They have priced out the segment of the market that would be the normal potential buyers…i.e. the folks in their own socio-economic bracket. There aren’t enough “bubble” wealty folks to buy these overpriced houses, and most of those smart enough to cash out at the peak and wait on the sidelines won’t pay these folks their inflated asking price.
I have little or no sympathy for some of these FBs. There’s no way in hell I’m funding their retirement plan for them.
“A very private backyard w/an above ground spa and some of the best mountain views around is perfect for family get togethers or quite dinner parties. How can you not make an offer? ”
Crazy. ‘How can you not make an offer?’–Easy. The enjoyment of watching their rate adjust and the foreclosure listing shortly afterwards on Realtytrac outweighs an offer even at half the asking price.
And here is that silly little question for the sellers one must ask of them…why are you selling? 184 days on market and you still haven’t a clue??
Frustration… hardly. More like stupidity.
IMO, they planned to flip it for a profit. Look at the walls. Very few pictures, and when I see them leaning up against the wall (pic over the fireplace), I get suspicious. They don’t want to mark up the walls because they think prospective future buyers will pay more for a “less lived-in” house.
We’ve discussed this before but the article on the Palm Springs area is a classic example of a headline that doesn’t reflect what the news is actually about. If you were to glance at the article you would think everything was peachy, until you read it. Lou Hirsh must’ve used a bucket of construction paste to get that headline to stick above that story. News is supposed to be about what is happening and what may happen as a result, the rest is history.
Valley house prices remain high
Median price drops, but sales counts go up
Lou Hirsh
The Desert Sun
April 27, 2006
When it comes to local home price appreciation, what a difference two years make.
Coachella Valley home prices, sales counts and appreciation rates continued their recent flattening-out patterns in March. The median selling price of $400,000 remained historically high for the region, but was down from the all-time high of $418,500 set the previous month, according to figures released this week by research firm DataQuick Information Systems.
Sales counts in March bounced back from a four-year low set in February, but at 1,134 properties the March total was still down 19.5 percent from a year ago, as reported at thedesertsun.com.
And according to Data-Quick figures, March’s year-over-year price appreciation of just over 8 percent marked the first time since November 2003 that the valley did not notch double-digit appreciation.
Just finished up some Chinese food for lunch–fortune cookie says:
“You shouldn’t overspend at the moment. Frugality is important.”
I think I’ll listen to the fortune cookie this time.
“‘For every two homes coming on to the market, only one is going off,’
This is cleaverly worded. It dosn’t say “SOLD” it says “going off”.
I wonder how many are selling are how many are “going off” because they didn’t get any offers and the seller decides to relist, or to rent it instead (typical “plan B” for many flippers), or just decided it wouldn’t sell and decided to stay put.
Is “going off” like “going postal”?
In regards to the posting about Oroville. I bought a house there two years ago because I couldn’t afford anything in the Sacramento area. My Oroville house was only 50% of what houses cost in Sacramento.
Now it seems like they are about as high as Sacramento. Doesn’t make because there are no jobs in Oroville unless you work for the county or PG&E.
I am satisfied with my investment in Oroville. I don’t care if houses crash though. That would mean I can afford to buy something else cheaper. Everything is relative.